Q4 2023 Oatly Group AB (publ) Earnings Call
Participants
Brian Kearney; VP of IR; Oatly Group AB
Jean-Christophe Flatin; CEO; Oatly Group AB
Daniel Ordonez; COO; Oatly Group AB
Marie-José David; CFO; Oatly Group AB
Michael Lavery; Analyst; Piper Sandler Companies
Kaumil Gajrawala; Analyst; Jefferies Group LLC
Andrew Lazar; Analyst; Barclays Bank
John Baumgartner; Analyst; Mizuho Securities
Presentation
Operator
Good day and welcome to the Oatly fourth-quarter 2023 earnings conference call. (Operator Instructions) Please note, this event is being recorded.
I would now like to turn the conference over to Brian Kearney, VP of Investor Relations. Please go ahead, sir.
Brian Kearney
Good morning, and thank you for joining us today on only Fourth Quarter 2023 earnings conference call. On today's call are our Chief Executive Officer, Jean-Christophe Flatin; our Chief Operating Officer, Daniel Ordonez; and our Chief Financial Officer, Marie-José David.
Before we begin, please review the disclaimer on Slide 3. During this call, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our future results of operations and financial position, industry and business trends, business strategy, market growth and anticipated cost savings.
These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could differ materially from actual events or those described in these forward-looking statements, please refer to the documents we have filed with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today.
Also, please note on today's call, management will refer to certain non-IFRS financial measures, including EBITDA, adjusted EBITDA, constant currency revenue and free cash flow.
While the company believes these non-IFRS financial measures will provide useful information, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IFRS. Please refer to today's release for a reconciliation of non-IFRS financial measures to the most comparable measures prepared in accordance with IFRS. In addition, only has posted a supplemental presentation on its website for reference.
I'd like to now turn the call over to Jean-Christophe.
Jean-Christophe Flatin
Thank you, Brian, and good morning, everyone. Slide 5 as the key messages that I want you to take away from today's presentation. First, 2023 was a pivotal year for the Company where we focused on stabilizing and recalibrating our business. We have achieved a lot last year, including fully funding our business plan by raising $465 million. Transitioning our senior leadership team taking actions to rightsize our SG&A structure, doubling down on our asset-light supply chain strategy by entering a long-term strategic partnership with US Foods as well as discontinuing the construction of the production facilities in the US and the UK, both of which will help us better focus our operations while adding appropriately timed expansion and capital efficiency. And we also increased our focus on the most profitable part of our business to ensure that our goals will be profitable and sustainable. We did this all while improving our financial profile, and we ended 2023 with a solid fourth quarter, where both top and bottom line results exceeded our expectations. As we look forward to 2024, our financial guidance reflects solid top-line goals while delivering significant bottom line improvements as we maintain our focus on driving this business towards profitable goals.
Specifically for the full year of 2024, we are guiding to the following constant currency revenue growth in the range of 5% to 10% and adjusted EBITDA loss in the range of $75 million to $60 million and for capital expenditure to be below $75 million.
Slide 6 gives you an overview of the progress that we have been making on moving each region towards consistent profitable goals. You may recall that we began with the EMEA segment where we prepare for goals by setting clear strategies for our teams. We also increased the simplicity of the region by reducing the spans and layers in order to enable them to move quickly.
Now the business is driving consistent profitable growth whilst reinvesting behind the brand building and innovation. We have since applied the same simple framework to the Americas and Asia, setting clear strategy and rightsizing these organizations in order to increase focus and agility. These two regions have improved their profitability through this combination of cost discipline and mix management and I am happy to report that the American segment reported its first months of positive adjusted EBITDA during the fourth quarter and that the Asia segment is making very good progress. We are still a lot of work to do in order to get them both to consistent profitable growth, which is why those segments do not yet have the last checkmark on our dashboard slide on slide 7, you can see the financial results of our actions. Both our gross margin and adjusted EBITDA have improved as we have moved through the year, just as one example of how much progress we have made in such a short amount of time, the midpoint of our guidance range for the full year 2020 for adjusted EBITDA is better than what we reported in the second quarter of 2023 alone. We are clearly making good progress now that we believe a big part of the heavy lifting of recalibrating and stabilizing our business is behind us. Our teams are excited to refocus the energy on growing the business and continuing to drive results in 2024 Our top priority remains driving towards profitable growth. The entire organization is focused on driving the business towards structural, consistent, profitable growth. We have made progress on improving our profitability, and we will continue to do so to drive towards profitability. We must bring the Oakley magic to more people. We have a terrific brand that resonates with consumers around the world, and we believe our products are second to none. In 2024, we will be stepping up our efforts to bring the OT magic to even more consumers. Each region will execute this slightly differently. But whether we are launching new products, expanding with new channels or activating the brand's unique OTT voice, the overall goal is to bring our products to more consumers next we must continue to work on the calibration of our resources. This calibration includes work on our supply chain as well as support functions on the supply chain. This includes completing our work on discontinuing the construction of our Americas and EMEA production facilities as well as the valuation of our Asian supply chain under support functions. This includes delivering on our SG&A cost reduction program, which remains on track.
Finally, the entire organization will also continue to focus on strong execution to ensure that we meet the expectations of our customers and consumer as we execute in 2024. We will be core to our mission and keep our eyes on our long-term opportunity. The world meteorological organization confirmed that 2023 was the warmest year in history. Given that our food systems are responsible for one-third of total human caused global greenhouse gas emissions, we, as a society need to drive a shift in our food system. And we, at Oakley intend to lead that shift by making it easier for consumers to make more sustainable choices. The opportunity is massive. Global dairy retail sales were nearly USD660 billion in 2023, and foodservice sales would make that number even bigger. Converting consumers from dairy products to oat milk products will drive a reduction in carbon emissions, and we are working to convert those consumers to our products as well as reduce the carbon footprints of our own products. Sustainability seeks at the heart of Oakley and is a core competence of our mission. Recently, we have made some modifications to our organization in order to bring our sustainability experts closer to the business in order to increase the impact. As part of this evolution, I will be assuming the responsibilities of being the company's Chief Sustainability Officer. We also know that we must continue to balance purpose and performance as lifestyle, believe performance without purpose is meaningless. I also know that purpose without performance, it's not possible. As an illustration of Oakley's purpose and performance working hand-in-hand, we see a massive opportunity to continue to expand our margins as a lever to fuel our company's purpose of converting consumers to our products. Our full year 2023 gross margin is approximately half of our long-term target of 35% to 40%. As we grow our volumes, leverage our assets and drive additional efficiencies. We expect our margins to expand so that we can expand our impact.
With that, I will now turn the call over to our Chief Operating Officer, Daniel Ordonez.
Daniel Ordonez
Thank you, J.C., and good morning, everyone. I'll begin my discussion on slide 11 with Omega, which is our largest operating segment. The MAS segment had a strong 2023, and it finished the year with a solid quarter constant currency net revenue growth was just below 12% in the quarter. Some customers bought product ahead of our price increases last year, which drove a strong 11.5% volume growth in the year-ago period. This impacted the year-over-year growth. And however, looking through that, we continue to see this business as quite strong and the retail scanner data I will present shortly supports exactly that view, the segment's adjusted EBITDA margin improved to 15.9% in the fourth quarter, with capacity utilization just in the mid 70s in the quarter. We continue to believe this segment continues to have room to improve margins.
Turning to Slide 12. On the left, you can see that the category growth remains healthy with all drinks growth of 11% on the right, you can see that throughout the year, we have steadily gained market share in our largest established markets. We are very proud to say that during the second half of 2023, we have achieved the number one market share in all plant-based meals in Germany, Austria, Switzerland and in the Netherlands. This is quite a feat given that we only sell old mills, one crop and not multiple crops of other plant-based milks.
On Slide 13, you can see some of the progress we have made in our new markets. Our strategy is to enter these new markets by first entering the specialty coffee channel to create the old meals category, the phenomenon in each market, these cafes are purely focused on super high quality, coffee and the coffee experience, and they are the cutting edge of the coffee culture by demonstrated our product quality and establishing trust within each community. We build our brand credibility and value proposition. As you can see, our strategy is working. We are already selling our products at a significant portion of this coffee specialty cafes in our new markets with most countries over 60% represented going forward. We plan to continue nurturing these relationships while expanding beyond this channel.
Now turning to slide 14, where we will start looking ahead at our plans for the MAS segment in 2024, we are planning to launch several exciting new products that will help round out our coffee portfolio a decade after the introduction of the iconic barista edition that defined the rules of the game in this category, we're stepping up on our mission to drive further conversion away from cow's milk and into oat milk by making it easier and more accessible for our consumers and customers with new innovations and new formats. Specifically, we are launching the following February edition Giga, which is an individual portion size serving great four locations as airplanes, trains and cafes, an organic version of our barista products, which will perform just as well as the original version, a version of our very steady sign for lighter or medium roasted coffee and high acidity coffee. Finally, a 1.5 liter version of our original barista, which is focused on saving very first time and minimizing packaging waste, be sure for us as these exciting new products at your local Cafe in the air or at the rails very, very soon.
Turning to slide 15, we have had success in expanding consumers' usage of our products by offering them a range of options. We have been calling this our goal Blue strategy in 2024. We will continue rolling out this strategy to continue making the conversion from dairy to oat milk this year.
Finally, we will be launching a new and improved old guard in selected geographies with current high per capita yogurt consumption. It contains live bacteria and we believe it is the best tasting plant-based yogurt on the market. And it is on par with dairy yogurt. If not better.
Turning now to our Americas segment on Slide 17. In the fourth quarter, the Americas segment continued to improve. Revenue grew 2% despite some of top line headwinds in foodservice that I will discuss adjusted EBITDA continued strength to improve steadily. As Tracy mentioned earlier, the Americas segment reported its first ever month of positive adjusted EBITDA during the quarter. Overall, we are very pleased with the progress on executing on improving our margin mix and delivering on our cost saving actions.
On Slide 18, you can see our progress in retail on the left hand side shown that we have been steadily making progress on gaining market share in the chilled oatmeal category. While our market share is above 25% in the four weeks ending December 30th. The right-hand side chart shows our chilled old mill percentage ACV over the past year. We have made steady gains throughout the year, enabled by our supply chain stability. You can see now that the distribution gains I discussed with you over the last quarter are starting to show up in the most recent data as the impact of the Shell reset is starting to flow through. Not all of those shelf resets have been reflected in the scanner data yet. So we expect this number to continue to increase. So overall, very good progress on the retail side of our business.
Slide 19 brings the impact of the shelf reset to life and a bit better. As you can see in this picture, we now have a good branding block on our new product and sweetened super basics and creamers are all of those on shelf. Our products are now showing up in more places and they are standing out better on shelves.
Turning to slide 20, on the foodservice side of the business, as we discussed last quarter, we have been aggressively pursuing new customers to expand and diversify our foodservice customer base to drive better growth and better margins.
The Americas segment grew its foodservice revenue by 4.5% year on year in the fourth quarter, excluding its largest foodservice customer, this business grew nearly 26%. So we are clearly making excellent progress in expanding our food service customer base to bring the Oakley magic to more consumers more customers while we're driving improved margins.
Moving down the P&L, Slide 21 shows that our co-packer consolidation in Americas drove solid results throughout the year. This initiative has driven the segment's cost of goods per liter down by a solid 12% from Q1 to Q4. This was enabled by the yeah foods transaction we completed earlier this year. As well as our strong ongoing partnership with innovation foods at our Melville facility. Both the higher food and innovation foods have been terrific partners as we continue to work with them to become more and more efficient. We believe we can continue to reduce our costs going forward in 2020.
For the Americas segments, we'll look to capitalize on the progress we've made in 2023 and bring the Audrey magic to a lot more people. For example, we will be executing several exciting campaigns such as partnering with gyms and innovations and activations that are tailor-made for the health and fitness community and targets Amin consumers in particular, we will also be continuing our partnership with Minor League Baseball, where we have some very exciting activations planned. This is such a great way to expand the reach of our brand beyond the country's biggest cities. So we look forward to sharing more with you just before the 2024 season begins.
Turning now into Asia on slide 23. As we discussed on last quarter's call, the Asia team has moved quickly to implement the first stage of their strategy reset plan.
On this slide, you can see the impact of those actions by refocusing the business on reducing costs that has been a top line impact and a significant bottom line impact. In the fourth quarter, we saw the top line trends started to stabilize, while adjusted EBITDA improved by $10 million sequentially.
Slide 24 focuses on the supply chain. You will recall that last quarter we told you that in Asia, the team reduced our SKUs by over 70%. This helped improved efficiency in the plants. We have also significantly shifted our production from our hybrid facility in Singapore to our end to end facility in mention China, which is closer to our distribution points with fewer SKUs to produce the mansion facilities able to run longer product runs and therefore increase efficiencies. The combination of the SKUs, reduction and production shift has resulted in a reduction of our cost of goods per liter by over 30% since the first quarter of 2023.
Now turning to Slide 25. While we are pleased with the progress today, we know that we still have work to do to get the segment to where it needs to be. And the team is squarely focused on achieving profitable growth. Phase one of our Reset plan was to cut back on SKUs, drive supply chain efficiency and reduce SG&A. Phase two is to rebuild the foodservice business in a disciplined way. As I mentioned on the last call, our sales teams are active and energized. They have been given the direction to continue to build the business with our core channels, geographies and SKUs for our business is strong, profitable and sustainable maintaining a high level of channel intimacy will be important as we look to rebuild the top line and improve profitability as we have been speaking with customers, we know we will need to round out our portfolio with additional SKUs that are optimized for the foodservice channel. This includes products that hit certain price points of flavorings that cater to seasonal preferences and in 2024. We plan to introduce some of these products and we will rebuild this business.
With that, I would now like to turn the call over to our CFO Marie-José David.
Marie-José David
Thank you, and good morning, everyone to Slide 27 gives you an overview of the P&L. For the quarter. We reported 4.6% year-over-year revenue growth and constant currency revenue growth of 2.5%. This was above our expectations driven by outperformance in our Aimia and Americas segments. Gross margin for the quarter was 23.4%. We achieved a 750 basis point improvement versus the prior year quarter and a 600 basis point sequential improvement from Q2. Freight gross profit dollars were in line with our expectations, while the percentage margin was slightly below our expectations, partially driven by an unfavorable mix impact.
Adjusted EBITDA was a loss of $19.2 million, which was ahead of our expectations. This was a $41.2 million improvement versus the prior year and $16.8 million improvement versus the first quarter.
Slide 28 shows the bridging items of our quarterly revenue growth. You can see volume increased 2% and price mix improved by 0.5% for a 2.5% constant currency revenue growth. Foreign exchange was a tailwind of 2.1%, resulting in 4.6% total revenue growth for the quarter.
Slide 29 shows the revenue bridge by segment.
Yes, continued to report strong growth with 11.8% constant currency revenue growth led by a 11.3% price mix improvement, which was driven by the price increase we took last winter and we started to anniversary this quarter. Americas 2.4% growth was driven by 9.2% volume growth, which was aided by distribution gains and sell-in of our new products. Price mix was a headwind of 6.8%, driven by new product related floating as well as customer mix. Asia 18% constant currency decline was driven by the actions we have taken as part of the segment's strategic reset. Plus volume declined 3.3%, which is a significant improvement for the first quarter's 15% decline. Price mix declined 14.7%, largely driven by unfavorable sales mix as we have rationalized shows that were higher price but lower margins for Keith showed you the sequential quarter-over-quarter gross margin bridge. The year-over-year bridge is provided in the appendix of this presentation. The largest driver of the sequential improvement in gross margin is the 490 basis point benefit from Asia strategic reset. As Daniel mentioned, this is a combination of cutting low-margin SKUs and driving increased efficiency in the supply chain. Within India and America, we saw a 60 basis point positive impact from pricing net of trade spend, and that was offset by a 250 basis point headwind, primarily from customer mix. We also saw continued benefit from supply chain efficiencies coming from absorption and Americas co-packer consolidation, all of which drove to 170 basis point improvement.
Slide 31 shows our adjusted EBITDA by segment. And you can see each segment reported a significant improvement compared to the prior year for both the quarter and full year. Also, the fourth quarter was the first time that this summer total of the adjusted EBITDA for the three regions was positive. It's clear that the Board strategic actions we have been taking are driving results quarter-after-quarter, we have been executing our plan, improving the business and driving the business towards profitable growth.
Turning to our balance sheet and cash flow on Slide 32. Overall, our liquidity position is strong and we are continuing to improve our free cash flow.
The left-hand chart shows our liquidity position at the end of the quarter. We ended the quarter with $454 million in total liquidity comprised of $249 million of cash and equivalents and $205 million of undrawn bank facilities The right-hand chart shows that we have made good progress in improving our free cash flow in the fourth quarter. Free cash flow was an outflow of $31 million. As I have said previously, improving our cash flow is a priority for me and our organization is very focused on this. As such, we expect our cash flow to continue to improve driven primarily by improvement in adjusted EBITDA and evidenced by improvements in working capital metrics as well as optimize capital expenditures for Q3 shows you our 2024 guidance. Our 2024 outlook reflects the continued impact of the actions we have been taking to build a stronger business and set ourselves up for strong, sustainable, long-term profitable growth.
Turning to details, we expect constant currency revenue growth in the range of 5% to 10%. We expect currency to be a small headwind. We expect the second half constant currency growth rate to be stronger than the first half, largely driven by volume growth acceleration in each region. For adjusted EBITDA, we expect to report a loss of between $35 million to $60 million in 2024.
At the midpoint, this would be a year-over-year improvement of over $100 million from where we landed in 2023. We expect this improvement to be driven by an improvement in gross profit dollars with some benefit coming from SG&A as we continue to deliver on our communicated cost reduction program, we expect adjusted EBITDA dollars to be stronger in the second half than in the first half. We expect the increase in gross profit to be primarily driven by sales volume growth. We also expect the benefit from certain lower cost, which is partially driven by easing inflation in certain inputs, but also driven by our supply chain, eliminating cost for productivity and efficiency programs. While we believe that the business continually improved our guidance range for adjusted EBITDA is below what we were previously targeting. That is primarily driven by more conservatism around our assumptions on new customer acquisition and new product launches while continuing to prioritize brand-building investments to energize the brand. We will continue to aggressively pursue new business and more efficient ways of working, and we have confidence in our volume-led growth in 2024. However, we believe that it's appropriate to have a more balanced outlook at this point.
Capex, we are reiterating our guidance of below $75 million for 2024, which continues to assume that our first Asian manufacturing facility remains. And to and as a reminder, we are continuing to evaluate our options for this plant.
Lastly, I would like to update you on the change we are making to our reportable segments effective the beginning of fiscal 2024. We began managing our operation with slightly different reportable segments, Europe and international and North America, Greater China and corporate. The most significant change is that the Greater China business will be separated from the Asia segment. The rest of the Asia business, which includes the Singapore manufacturing facility, together with the current India segment, will constitute the New Europe and International segments. We will also be moving R&D expenses out of corporate and into the individual segments to better align with how we allocate resources. In the coming weeks, we will provide recast financial information that is consistent with our new reporting segment structure, we will begin to provide our financial results under the new reportable segments with our first quarter results. This concludes our prepared remarks. Operator, we are now prepared to take questions.
Question and Answer Session
Operator
(Operator Instructions) Michael Lavery, Piper Sandler.
Michael Lavery
Good morning. Thank you. You touched on in your prepared remarks on the status of the relationship with your largest food service customer in the Americas and how that may or may not be changing. Can you maybe just give a little bit more detail there, please?
Daniel Ordonez
Thank you, Michael, Daniel here. While you. Thank you for joining us this morning. You know, and we have said repeatedly in the last earnings call, we have only one NorthStar and that is profitable growth. So um, we have since last earnings continue to make steady progress on channel mix. In general, we are actively rebalancing growth between the very important foodservice customers that are low margin with significant growth in higher-margin channels that present a very significant growth opportunity for us. And you would have appreciated seeing that in the in the prepared remarks and in the presentation. These channels are number one, retail and number two, the foodservice sub channels in which the brand can be experienced to its fullest by customers, right? Like example, University's campuses workplaces and and all other iconic high street customers that you've seen in recent in recent press releases. So as you saw in the prepared remarks, we are making steady progress in these two domains, retail and foodservice outside the largest customer and the headspace for growth continues to be very significant.
Now to your question, we continue to work very well with all customers. And let me underline all our largest customer is no different to that. So in that, in fact, over the past few months, our conversations have become more and more constructive and we believe there is a path forward that is mutually beneficial.
So with regards to the 2024 outlook, without giving any forecast by customer, we expect less of a quarterly headwind going forward versus what we presented at the last earnings. So thank you, Michael, for the question.
Michael Lavery
So no, that's helpful. And just given the updated thoughts on 2024 EBITDA and the progression there. I know on slide 32, I think it is you touch on liquidity and the balance sheet, but can you give a sense of your expectations a little bit further out, we should what would your change now suggest that you may be coming up towards another capital raise at some point? Or are you are you do you have the multiyear plan that you've cut that off the table? And just how should we think about kind of the trajectory there and what your expectations are?
Marie-José David
Yes, hi, Michael, this is Marie-José. The let me try first to go back to the prepared remarks where, as I mentioned and our liquidity position is strong and we continue to improve our free cash flow. And our we believe our is the one that when I say we believe our liquidity position, which remains really strong, is because we are adequately funded from a business plan that we have healthy cash balance as well as you know, revolver backup, we are as well as we are throughout the quarter, driving improvements on our free cash flow from, of course, from our adjusted EBITDA that had one working capital opportunity. You know that those metrics from working capital, our business is super important for me. So we definitely are still on this front, we are fully funded until we reach free cash flow quality and we continue to work on that front.
Michael Lavery
That's really helpful. Thanks so much.
Operator
Kaumil Gajrawala, Jefferies.
Kaumil Gajrawala
Hey, everybody, good morning or good afternoon. I suppose depending of what you guys where you guys are on and given the change in your 2024 outlook, maybe you could just provide a few more details. You mentioned some shifts on expectations on new customers, expectations on innovation, anymore color provide would be useful.
Jean-Christophe Flatin
Good morning, Kaumil, good to speak to you again and thank you for asking. Let me unpack for you with the three main drivers that shaped the design of our guidance. Number one, I just want to reiterate the magnitude of the turnaround journey that we are driving. As a reminder, in 2022, which is just 13 months ago, this business lost $268 million of adjusted EBITDA in 2023. As you adjust for Centaur N4 and mobilization on profitable goals, we have reduced its loss by one of those $10 million. And when you look at the midpoints of our 2020 core guidance is projecting another reduction of $110 million between 24 and 23. So the magnitude of this turnaround to the $20 million improvement in adjusted EBITDA in two years and what it takes to achieve it open nationally is the first driver of our guidance. Second and very clearly in coffee table was you hear goals? Why do I underline that?
I and we strongly this business has a massive growth opportunity in front of us. We are convinced about that. Hence, our duty is to capture the growth potential. So our adjusted EBITDA guidance also reflects healthy growth investments, innovation projects slotting fees for new products, new filters for legal fees and of course, while the investments to carry on unique brand growth, all of these in a very rigorous and chose to manner. So the second driver of our adjusted EBITDA guidance, linear reflection of the balance profitable goals, not stuff.
Finally, as you have heard in our demos of three segments, I mean three, very diverse situations when it comes to maturity and execution. Some are more advanced like some like Greater China, for example, just completed the first phase of the reset. And therefore, our guidance needed to reflect the diversity within our segments portfolio and that what guided our guidance.
Kaumil Gajrawala
Got it. Thank you. And then if I may ask, you highlighted the shelf space or expected shelf space gains on. Can you again provide a bit more color on that? It's 10%, 20% more? And then how does that translate to incremental sales?
Daniel Ordonez
Kaumil, Daniel here. I guess you are referring to the Americas in particular.
Kaumil Gajrawala
Yes, I'm sorry.
Daniel Ordonez
That's where you highlighted specifically for the Americas.
Kaumil Gajrawala
Yes.
Daniel Ordonez
Well, yes, up that I was trying my best to them to answer what's behind your question, Camille, which is our progress in retail in the retail space.
Another question coming in the dividend question about shelf space, which is obviously we're tracking and we're gaining right, although the data is very recent, and I won't be able to fully share that with you today. So but some as you saw in the prepared remarks, Camille, the team is delivering some very significant distribution gains consistent with the discussions we have had in previous ones in previous quarter. So as you heard us talking about controlling the controllables, you know, we were able to drive TDPs growth above 50%, five zero and the ACVs have grown for about 1,000 basis points year on year to 43% and still counting. So there is more room to go there in terms of TDP.s and ACV. So weighted distribution, this as Camille generated the highest ever market share in notebooks. You guys are tracking the scanner data. I know you are so one above the 25% for oat milk and 6% across all plant-based drinks. So the traction you might have seen in the recent scanner data with solid growth in both units and dollars in our core business. So we believe our Yes, indeed, share share of shelf is growing. Distribution is growing. And we see this as only the beginning, you know, coming out of the we are the only category pure player in oat milk and we are the brand that has proven to drive category penetration. So at holding that unique space and with so much plenty, plenty of ACV runway ahead. There is more more to come and more to go with supply chain reliability issues behind and having regained distribution. We expect steady progress on distribution and sales execution to drive sales execution to drive further profitable growth. I hope that answers your question on commit.
Kaumil Gajrawala
Yes. Thank you.
Operator
Andrew Lazar, Barclays.
Andrew Lazar
Great. Thanks so much. Yes, good morning, everybody. And other income. I guess I'm curious about the cadence of EBITDA as we move through 24 and EBITDA, obviously improved sequentially each quarter through 23. And I guess I'm curious whether this pattern continues as we start 24, meaning sequential improvement? Or are there reasons that perhaps EBITDA losses expand again versus the fourth quarter as we move into the first half? And if so, why? Because I think I heard you say that EBITDA dollars would be concentrated more in the back half. So maybe I've answered my own question, but I'm trying to get a sense of how you see the EBITDA cadence going as we go through the year and what the rationale behind that cadence would?
Marie-José David
Hi, Andrew. This is Marie-José. Are nice meeting you and I will answer the process when it comes to your question. So the first one is over the past 12 months, right? You know that we have established a foundation to run a better business towards profitable growth. It's true that last year we guided to quarterly improvements that we saw that in small nonaccrual out of the 12 months of establishing foundations and that we look more at the longer term time horizon center at the upcoming quarter. So this is just to give you an overview on why we are not driving quarter-over-quarter anymore.
Now, as you mentioned, and as I said, as far as our guidance goes for the second half to be stronger than the first half on sales growth and on EBITDA as it is through our work towards market, we are not guiding to quarters, but the first quarter, as I just said, we obviously have some dynamics such as the Chinese New Year such as from spend from new products, new distribution driving sake.
And Tracy for us, I mean, you've heard us saying that two times already also as I mentioned in the prepared remarks, right, we are working on anything in lifting costs through productivity and efficiency program. So it's now my answer to the question on EBITDA. Our EBITDA will be between $35 million and $60 million, which again, I want to emphasize for year-over-year improvement between $98 million and $123 million. So out of these improvements just to be very precise, we are expecting roughly $20 million to $25 million to come from SG&A reductions. As a reminder, SG&A includes distribution first time we know those are pretty variable and the remaining portion of the significant improvement will come from gross profit. So in a nutshell, the there is no guidance on quarter-over-quarter. If there is more a long-term view understanding, as I just said, that the second half will be stronger than the first half, and we see also now from 29 29.
Andrew Lazar
Thank you for that.
Marie-José David
And then I'm sorry, I forgot now I wanted to make sure that answered your question.
Andrew Lazar
It does. That does, thank you. And then you talked a little about this in the prepared remarks, but I want to make sure I have it right. Despite a lot of sequential progress that you clearly have been making and you've talked about you've pushed back the timing on getting to EBITDA positive, right several times and I think don't expect that this year either.
It would seem I guess if you had to like just boil it down and sort of bucket it into maybe the top couple of things. Have they have been the main rationale or reason for that shifting? And why maybe the visibility to that hasn't been what you would have wanted it to be like what would those be? What I'm trying to assess is why has it gotten pushed back? Why would your visibility to the EBITDA guidance you're providing for this year be more solid maybe than what it's been in, whatever past couple of quarters if you kind of get my point.
Jean-Christophe Flatin
Well, thank you. I'll take this one. Clearly, the way we are guiding today is the outcome of our budgeting process. And if you say what have you been doing since we last spoke. One of the things we did was budgeting, which is evaluating scenarios in the life of the business context, we have the choice to go for profit only, but this is not in line with our North Star, which is profitable growth because it could have been there the future growth potential of this business. So as I explained, when we boil down to answer your question, the main drivers of this guidance. First, this is an immense turnaround journey to reduce $220 billion plus of adjusted EBITDA in two years. Second we've really mostly to protect healthy growth investments to capture the massive growth potential that we believe we have.
And finally, taking into account leaving the diverse situation of our three segments So in a nutshell, winding down, this is what drove us.
Andrew Lazar
Thanks so much.
Operator
Max Gumport, BNP Paribas.
Michael Lavery
Please proceed and then thanks for the question one quickly on Americas. So it sounds like foodservice in Americas revenue was up 4.5%, total Americas up 2%. So it would imply not much growth for US retail in the scanner data, at least we're seeing for the milk business, it's up mid-single digits or better in 4Q. So I just wanted to make sure we're not missing anything in terms of non-tracked channel impact or inventory dynamics that held back US retail revenue in 4Q? Thanks.
Daniel Ordonez
Thank you, Max, and good morning, Daniel here. Yes, on I will go straight into your question. What you see is the net effect of the slotting fees in Q4 Max, as you saw, there is a very heavy NPD innovation agenda that the teams are working on starting at the end of last year, beginning of this year with some very exciting and new listings, and that's the impact. So you could see there in the volume growth. And you can see in the very exciting market data that I'm sure you've seen on January the 30th.
So on listen, we are seeing TD. piece of the charts at 50% growth, ACV at 43% and growing. Remember a year ago, we were at 34, three four and we grew the room to grow so a record market shares and really a very, very nice dynamics in top line growth in our core wholesale business, about 10%. So on Prop Uno, a positive outlook and the net effect of the slotting fees. That's what we can add on that.
Andrew Lazar
Great. Makes sense. And then a year ago, you laid out your expectation to achieve a high 20% gross margin this quarter. Obviously, the business has changed quite a bit. The strategy has changed. Looking at the bridges you provided over the last year. It seems like one headwind that's been larger than you might have expected a year ago. Was the trade promotion and mix strength that you have at this hoping you could expand on why that played out a bit differently than expected and also what this means for gross margin and 24. I'll leave it there. Thank you very much.
Marie-José David
Yes, hi, Matt. This is Marie-José. So look, when we look at the when we look at where we landed for gross profit, there is no energy structure or any kind of. As a reminder, at one, we changed our margin guidance last quarter from high 20s to mid 20s. It was driven by the expected costs related to the execution of our Reset plan in China, mainly from the store rationalization, as we mentioned, combined with the impact from the foodservice mix in the US. So both of those both elements somehow came slightly different from our forecast. But as I said, as fast. We see nothing structural here. I mean, we said it right. And Jean-Christophe mentioned it buried of gross margin as a key lever to deliver on our North Star and I'm very confident on 2024.
Operator
John Baumgartner, Mizuho.
John Baumgartner
Good, good morning.
Thanks for the questions. I guess I was just wondering first off I wanted to come back to the impairment charge in Q4. I'm not entirely clear what happened there. The press release noted certain events that resulted in discontinued construction. Can you disclose the events that have in the what drove the charge? Is there a pivot from here similar to another sort of yacht agreement in your future? And any comments would be helpful.
Jean-Christophe Flatin
Thank you, Joe. Let me let me take the the contact point or let's say what you see in the impairment charge for Q4 is only And I insist on the execution of the discontinuation of the U.S. and EMEA factoring we announced in the Q3 call, nothing new, nothing different.
John Baumgartner
Okay. Okay, great. Second question for Daniel, if I could. Going back to slide 14 and the innovation there in India, I guess it was the Jaeger, the Mini, the one liter, the 1.5 liter. It feels as though you're introducing a lot more complexity into the portfolio. And I think back to the Ice Cream and Frozen Desserts strategy in Asia and how complexity they're impacting the business and profitability, can you speak to the complexity in India? I mean, are these products produced internally? Are they profitable? I'm just wondering at what point the complexity becomes more of a headwind than a revenue opportunity for you. Fantastic job.
Daniel Ordonez
Well, thank you. That's a great question. Relative to waiting, which I would approach that question, Jon. First from a consumer standpoint and from a revenue pool from a growth space standpoint, we're doubling down on the range the Everest edition, which is was really pretty much defined the rules of the game in plant-based opening. So what you see here since you made the comparison versus China, there is nothing similar to what we have reset it in China. This is doubling down vertically, allow me to use this geometrical metaphor on what's working for us. So it's more locations and more spaces and more cultural spaces for our coffee moments. That's that's incremental growth in different spaces, Jaeger, you will see it in railway stations in air in there, in airplanes, et cetera, et cetera. Organic. There are many customers that were not prepared to welcome only because we didn't have an organic opportunity that that's what you see from a customer a consumer standpoint.
And on your question on complexity had to do with the way we manage the operations in which we are relentlessly focusing on efficiency. These changes pretty much nothing to us. This is doubling down on the same supply chain network as we have today in Europe is listening in and influence SEK more and more so more efficiency. Imagine from an engineering standpoint, from a manufacturing standpoint, you're talking about the same pack sizes and the same performance. So you're doubling down on the utilization of the same.
John Baumgartner
Okay. And then last, if I could for for guidance for 2024, I can appreciate the incremental conservatism there, but and I think there was a mention of customer acquisition timing and some conservatism built in there. I'm curious, do we come back to that? Is that is that comment in the context of some of the volatility in the Americas foodservice with your customer mix, are you seeing anything at retail just given the softness in plant-based beverage volumes? Are you seeing customers being maybe less inclined to add SKUs at this point? Or any color there would be helpful. Thank you.
Daniel Ordonez
No, no, thank you for the question. No, not really no. It is a general assessment of adopting a conservative outlook in how we look at the business at the moment of setting the guidance. And of course, there are multiple variables when it comes to that. It's certainly not specifically related to foodservice or the largest customer as you might have in your head?
Well, the retail dynamics, which you know in the Americas, go in the opposite direction.
John Baumgartner
Thank you very much.
Operator
This concludes our question-and-answer session. I would like to turn to the call for any closing remarks.
Brian Kearney
Great. Thank you very much. This concludes our call. Feel free to reach out to the Investor Relations team if you'd like to schedule any follow-up call ticket.
Operator
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.